Commerce and Industry Minister Piyush Goyal called for a renegotiation of the India-ASEAN free trade agreement (FTA), to prevent its misuse by ‘third parties’ and remove trade restrictions as well as non-tariff barriers that he said have hurt Indian exports disproportionately since the pact was operationalised in 2010.
“It is unfortunate that in the recent past, we had to deal with several restrictive barriers on our exports in the ASEAN region, particularly in the agriculture and auto sectors. I think this only resulted in reciprocal action from other countries, including from India, and will hurt the long-term desire of our leaders to expand trade between the two sides,” Mr. Goyal said on Friday.
Underlining the need for ‘renegotiating’ the existing FTA Mr Goyal said the focus needs to be on new rules to eliminate the misuse of the FTA ‘often by third parties outside the ASEAN’, hinting at China. Both sides also needed to bring down non-tariff barriers which can ultimately also lead to more confidence to reduce tariffs for inter-ASEAN and India trade, the minister said.
“India is currently witnessing exponential growth in imports from the ASEAN region, while our exports have been impeded by non-reciprocity in FTA concessions, non-tariff barriers, import restrictions, quotas and export taxes from ASEAN countries. Such a review will enable alignment with contemporary trade practices, procedures and regulatory harmonisation,” he said at a session with ASEAN trade and finance ministers hosted by the Confederation of Indian Industry.
India’s bilateral trade with ASEAN can go up from $80 billion to $200 billion with a collective effort, he said. “For trade to grow, it needs to be fair, transparent, equitable, reciprocal and inclusive,” Mr Goyal asserted, urging ASEAN ministers to push for an ‘early completion of the scoping exercise’ so the trade pact review can begin.
Brunei Darussalam’s Finance and Economy Minister Yang Berhormat Dato Seri Setia Dr Awang Haji Mohd Amin Liew bin Abdullah hoped the trade pact review will achieve ‘a balance between regulation and market access’ and ensure freer flow of goods and services across borders. He also noted that ASEAN-India trade had declined 14% in 2020 to $65.6 billion, but India remained one of ASEAN’s largest trading partners, as well as FDI investor with fresh investments of $2.1 billion in 2020.
Minister Goyal referred to the rise in container and shipping costs due to shifting global value chains and said India and ASEAN nations, nine of which 'touch the sea', can co-operate to become a global trading and logistics hub.
“A very prosperous ASEAN is central to India’s vision for the Indo-Pacific region in terms of stability, security and growth. We believe our co-operation can improve significantly in many areas like services, information technology, IoT, Industry 4.0, better manufacturing practices, healthcare, start ups, electronics, aqua culture,” Mr. Goyal said.
“By combining our strengths, we can rewrite and make a golden chapter of progress and prosperity for 30% of the world’s population,” he said, referring to the 2 billion population in India and the ten ASEAN nations. “Let us all resolve to work together to deepen our trade and investment relations in the post-COVID world and strengthen our people to people and business to business interactions,” he concluded.
